Provider: Friends Provident Product: Income protection plan Maximum age attained at entry: Max...
Provider: Friends Provident
Product: Income protection plan
Maximum age attained at entry: Maximum age at entry is 55 next birthday.
Maximum annual benefit available: £124,800 – The maximum benefit is currently £2,400 per week for all income protection policies including those with other insurers. For class four occupation, the maximum for four weeks deferred is £600 per week. Friends Provident will consider cases over these limits on an individual basis, subject to financial evidence and reassurance.
Retirement age: Between 50 and 65
Vary the retirement age after start date: The term may be increased on request, subject to underwriting. The term may be decreased on request, no underwriting required.
Guaranteed insurability options available: The option is available at the end of the third, sixth, ninth, 12th and 15th anniversaries of the effective date, but no option is available within ten years of the policy's expiry date. The income protection benefit under any further policy affected as a result of the exercise of this option shall not exceed 30% of the initial benefit.
The option may be exercised by the insured completing the relevant application form, which must be received by Friends Provident no later than 15 days after the date on which the option was available.
Benefit amount index linked:
Level income plan – Payments and the plan income remain level throughout. Provided the insured remains in good health, they can increase the level of income benefit by taking out more policies as their income rises, subject to underwriting.
Increasing cover plan – In this option, the level of income insured rises each year. It automatically increases by 5% per year compound to help offset rising prices; regardless of any changes in the insured's state of health. Premium payments will also rise at the same rate.
Guaranteed premium rates available: Yes. Premium rates are guaranteed throughout the term of the plan irrespective of any change of occupation or pursuits, or of Friends Provident's claims experience.
Career break available: The plan will automatically include a career break option free of charge. If the planholder stops working for a while to raise children or undertake further education, for example, then they can take advantage of the career break option. This will allow the planholder to take out a new plan on a houseperson's benefit basis, subject to certain maximum benefits. They will then have the option, within five years of the start date of the career break, of reinstating their existing plans on their original terms and conditions when they start work again.
Houseperson cover available: Houseperson cover is available to those not working or who work less than an average of 16 hours per week on a regular basis. It provides a regular income to cover the cost of childcare, invalid care, or household help.
For the purposes of houseperson benefit, period of incapacity means a period throughout which the insured is normally and routinely unable, because of illness or accidental injury, to perform two of five tests without the help of another person, but with the use of appropriate corrective aids or appliances.
Or the person is unable, by reason of illness or accidental injury, to conduct an independent basic existence e.g. they are confined to the home or hospital or unable to cook, do light housework and dress themselves. Or, the person is shown to be suffering a psychotic or well-defined mental illness, which is medically uncontrollable, despite treatment by a consultant psychiatrist.
Maximum houseperson benefit: The maximum houseperson benefit is £300 per week. This is less any continuing houseperson's income, which is defined as the weekly rate of benefits, due under any other insurance against incapacity. This includes a regular payment to the insured or waiver of a regular payment by the insured and the weekly equivalent of any pension derived by the insured from employment, unless the insured was already in receipt of the pension prior to effecting the policy. This does not include insurance that waives contributions made into a statutory approved or exempt approved pension arrangement or State incapacity benefits or other income received by the insured from employment. Continuing houseperson income received by the insured is the amount received net of any income tax.
Deferred period applicable to houseperson benefit: Deferred periods of four, 13, 26 or 52 weeks are available. Occupation class on housepersons' benefit will be classed as class one.
Relapse benefit available: Linked periods of incapacity – If a further period of incapacity or period of houseperson incapacity commences:
• Within 26 weeks of the termination of a previous period of incapacity during which income protection benefit, houseperson benefit or proportionate benefit was payable.
• During a period of entitlement to rehabilitation benefit, and the further period arises from the same cause as the previous period, then the periods will be linked. This means that the first period will be regarded as having continued throughout for all purposes other than for determining pre-incapacity earnings and there will be no entitlement to benefit in respect of days between periods.
Hospitalisation benefit available: Hospitalisation benefit is included at no extra cost and is available from the eighth day if the insured has been confined to hospital following an illness or accidental injury.
This cover is included free and continues until the 13th week while the insured remains in hospital. The hospitalisation benefit will be payable commencing from the eighth day in hospital and provides cover right up until the 91st complete day of confinement to hospital or to the end of the deferred period if this is earlier.
The benefit is payable at a rate of one seventh of the insured weekly benefit for each day of hospital confinement. The income protection benefit will become payable at the end of the deferred period in the normal way. The benefit is subject to a limit of £150 per day including the hospitalisation benefit under existing policies.
Maximum % of income insurable: The maximum insurable benefit is calculated as follows: 70% of the first £10,000 per year of pre-incapacity earnings, plus 60% of the next £20,000 per year of pre-incapacity earnings, plus 50% of the next £40,000 per year of pre-incapacity earnings, plus 40% of pre-incapacity earnings in excess of £70,000 per year, divided by 52.
Dividends received by the insured from a limited company, with no more than three other shareholders. One employed as full-time working directors, and which represent the insured's share of the net-trading profit of that company from its normal regular business can be treated as part of income for the purposes of calculating benefits under this formula. Benefits in kind, as currently shown on Inland Revenue form P11D can be included as salary in order to calculate benefits.
In order to maintain a financial incentive to return to work following a period of incapacity, the policy will include a limitation. If at the end of a deferred period the insured's continuing income plus the income protection benefit exceeds the maximum insurable benefit, then any income protection benefit payable under the policy will be reduced by the amount of the excess.
The insured's continuing income is defined as income received by the insured or waiver of a regular payment due from the insured during a period of incapacity and includes:
• The weekly rate of benefits due under any other insurance plans against incapacity, which involve a regular payment to the insured or waiver of a regular payment by the insured.
This includes the amount of credit repayment instalments paid due to incapacity under mortgage payment protection policies and under any other form of loan, finance or credit protection policies. This is together with the weekly equivalent of premiums waived due to incapacity under policies of life assurance to the extent that those life premiums exceed £60 per month in total. It does not include insurance plans that waive contributions made into a statutory approved or exempt approved pension arrangement, nor does it include payments under insurance plans which fund such contributions during incapacity where those payments are made by the insurer directly to the administrator or provider of the pension arrangement.
• The weekly equivalent of any continuing salary, commission, pension (unless the insured was already in receipt of the pension prior to effecting the policy) or other income derived by the insured from employment including dividends and benefits in kind as described below.
• The weekly equivalent of any state benefits arising from incapacity by illness or accidental injury to which the insured is entitled (but excluding any amounts relating to dependants and disability living allowance).
Continuing income received by the insured is the amount received net of any income tax.
Standard definition of disability: Own occupation means a period throughout which the insured is totally unable, because of illness or accidental injury, to perform the material and substantial duties of their employment and is not engaged in a remunerative occupation. Employment means each and every remunerative occupation of the insured at the commencement of incapacity.
Deferred Periods: Four, 13, 26 and 52 weeks
Two deferred periods in one plan: Yes. Where a person has more than one job or a tiered sick pay arrangement so that two or more plans are effected with different deferred periods at the same time. The minimum premium and plan charge are reduced to £5 and £2 per month respectively.
Number of occupation classes: Four.
Class one – Professional, clerical or similar non-hazardous occupations.
Class two – Slight extra risk is involved, administrative occupations in an industrial environment, sales occupations or occupations involving above average driving.
Class three – Occupations involving some manual work, but no appreciable hazard or with a noticeably increased sickness risk, such as teachers or dentists.
Class four – Occupations involving mainly manual work, or with a noticeably increased accident risk such as builders.
NHS Doctors Sick Pay Initiative: If, at the start of a period of incapacity, the insured is a doctor in the NHS and has been employed for less than five years, then the deferred period will cease as follows:
• If the deferred period stated in the policy schedule is 26 weeks, then it will cease when the full sick pay from the NHS ceases.
• If the deferred period stated in the policy schedule is 52 weeks, then it will cease when the half sick pay from the NHS ceases.
Number of exclusions: Three – War, Pregnancy, HIV/AIDS.
